What if I get a bad tenant? Or worse… what if I can’t even find a tenant!?

What if the house burns down!!?

On many occasions, these were all questions that would’ve stopped me from investing in rental properties before I even started.

I’m glad to say that I didn’t let the fear of failure stop me from starting my real estate investing journey. Because now I have 4 cash flowing rental units that are paying for my 5th unit (4 rental properties in total) which I’ll be living in, and money left over to pay for my living expenses.

Not too shabby for a twentysomething years old Information Technology yuppie. 😉

While there are many ways to build wealth, I chose real estate investing simply because I LOVE everything about it. Not only has it helped me create a source of passive income, it also taught me to look at my wealth differently.

Investing your money into a rental property doesn’t have to be intimidating. Which is why I’m going to be sharing with you the 7 steps that I took to help me buy my first rental property while working full-time at a desk job. 🙂

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Try to ask yourself before buying anything, “Do I need this or do I want this?” This simple question is enough to get rid of most of your bad purchases so you won’t end up having buyer’s remorse as often as before.

Start Saving And Set Up An Automatic “Pay-Yourself-First” Plan’

For those of you who are anti-budgeting – This is for you. In fact, “pay-yourself-first” is the main reason why I was able to save $100k by 25.

What does “Pay-Yourself-First” mean anyway?

It simply means that when you get your paycheck, before paying for your bill(s) or credit card(s). You PAY YOURSELF FIRST! And whatever you’re left with afterward is what you’ll be living with for the rest of the month.

Start by setting up an automatic deposit on the same day that you get paid and put a set amount of money away from your chequing account to a separate investment account. This is a good habit to have because your money is “gone” before you can even use it.

If you don’t have a saving or investment account – Seriously, go to the bank and open one!

Click here to sign up for your own Tangerine account. Use my orange key 32976970S1 when signing up and you’ll receive $50 after you deposit $100 or more into your brand spanking new account. Who doesn’t like free money. 😉

Let’s face it – The person that will care the most about your money is you.

Note: I understand that there are full of resources out there about the “no money down” strategies. However, no matter how you purchase it, it’s always smart to have a reserved fund prepared and ready to be used in case anything happens. Hope for the best and prepare for the worst. 🙂

Step 2: Find Out How Much You Qualify For

Now that you’ve got your finances straight. It’s time to see how much “real estate” you can actually afford.

As a real estate investing beginner, you’re most likely going to be getting your loan the conventional way. That is through a mortgage broker or visiting one of the big banks in Canada.

If you do this, you’ll need to make sure your credit score is looking good because banks will be looking at your credit history to determine whether or not they want to lend you the money.

You’ll need to provide banks with information about your annual income, assets, and liabilities. So if you have any unpaid consumer debts, I would suggest that you get rid of your debts to get a better chance of approving for more.

Having a trustworthy mortgage specialist is essential as a part of this process. If you don’t know one, ask around for a referral or interview a few on your own.

Personally, I find that getting a recommendation from your friends or family is better than you trying to find one on your own. This way the mortgage broker is already aware that you’re a referral from their existing client or someone they know.

They’ll work harder for you because they don’t want to embarrass the person who referred them. See what I’m saying. 😉

Step 3: Do Your Real Estate Investing Homework

I know you don’t want to hear this, but seriously, you have to do your homework! Real estate investing is not complicated to understand compared to the stuff we’ve learned in school!

Here are some sites and books that I found helpful to me before I bought my first rental property:

Bigger Pockets: This is an awesome site to learn from, especially when you’re just starting out. They have so much useful knowledge and resources on there. All Free! Not even joking! Yes, I know it’s an American site. But honestly, a lot of the ideas/strategies work in Canada too. Also, look for their podcasts and start listening to them. Instead of doing a ‘Netflix and chill’, why not do a ‘BiggerPockets and chill’ instead!?

Financial Post: Being a Canadian real estate investor, you always want to keep up with all the latest financial news in Canada. This site tells you exactly that! There are things about real estate investing, personal finance, stock market news and more. Most importantly, it’s really interesting to read too.

Also, You should grow your network; learn to meet and mingle with other like-minded individuals. Yes, I know this is an introvert’s worst nightmare. Being an introvert myself, this is something that I haven’t mastered too!

However, I do try to be open minded and network whenever I get the chance to; meeting the right person can do wonders for your investing career.

Step 4: Find A Mentor

When looking for a mentor, you want to find someone who has way more experience than you. You want to find “The Yoda” of all real estate investing.

Someone who can guide you along your journey. If you’re lucky enough to know someone like that around you, you should take this person out and pick their brain, like yesterday!

On the other hand, if you don’t know anyone that qualifies to be your mentor yet, don’t worry, me too!

A mentor can be a “virtual” mentor as well. Someone that inspired you from a book, podcast or even a blog post! Some mentors who have inspired me are Grant Cardone, Robert Kiyosaki, and Mr. Money Mustache.

All of them have taught me so much from real estate investing to personal finance. Every time I feel a slight defeat, I look to them for inspiration.

Learning from your mentors can motivate you to do great things.

So stop making excuses and start finding a mentor who inspires you to succeed!

Step 5: Find A Location To Invest In

In the world of real estate investing, finding a location to invest in can be an intimidating thought. If you’re just starting out, I definitely recommend investing somewhere close to where you live. Pick somewhere that you’re familiar with and comfortable to invest your money in. Think of it as looking for a permanent home for your money. 🙂

Here are some of the main criteria that I look for when buying a rental property:

Location

Future Jobs, Opportunities, and Developments

Unemployment Rate

Population Growth

Vacancy Rate

Rent Prices

Crime Rate

Property Taxes

These are some key points to start your location hunt. Once you’ve picked the location, there are many other things to consider as well, such as a good property manager, contractor, real estate agent, or lawyer. When you get to that point, you want to find someone who is just as motivated as you are; preferably someone who is a real estate investor as well.

Step 7: Get Out There And Take Action!

This is the last step and the most important! While it’s easy to obtain knowledge about owning a rental property in this information age, unfortunately, most people stop here.

Now that you’ve done steps 1 – 6, you need to start applying this knowledge and turn it into action. Start looking around for properties to buy and try putting some offers down.

Don’t worry about your offers not being accepted or whatever. Just go out there and try it.

You’ll soon realize that it doesn’t matter how many deals you’ve looked at, you just need to find the one that works!

The #1 thing that I’ve learned from other real estate investors is that even if you do fail somewhere along your journey, the experience that you gain from it will be an even greater lesson than anything you can learn anywhere else!

Keep practicing and when the right opportunity comes, you’ll be able to grab and hold onto it with confidence. I know that the fear of failure can be scary, but the feeling of success makes it all worthwhile in the end.

Finally, be ready to take action and actually buy a rental property once you’ve found a good deal. Don’t be afraid that you’re going to fail, just get out there and start investing into your own wealth now!

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An epic bonus cheat sheet that includes useful real estate investing terms and formulas that will help you analyze rental properties like a pro!

Lisa

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Comments

Great post! I would love to start investing in real estate, although at the moment I just have my personal property. Hoping to start saving more and move towards having some rentals. Thanks for the info!